[The Personal Property Security Act, or Republic Act No. 11057, originated from House Bill No. 6907 under Committee Report No. 550 and Senate Bill. No. 1459 under Committee Report No. 86. For a background what spurred the enactment of Personal Property Security Act, it is helpful to look at the explanations given by the law’s sponsors, including the sponsorship speech of Senator Paolo Benigno “Bam” A. Aquino IV on 22 May 2016. Here’s the full text:]
Good afternoon, Mr. President and esteemed colleagues! Mga kaibigan at mga kababayan, magandang hapon sa ating lahat.
It is an honor, Mr. President, to sponsor Senate Bill No. 354, under Committee Report No. 86, entitled Strengthening The Secured Transactions Legal Framework In The Philippines, Which Shall Provide For The Creation, Perfection, Determination Of Priority, Establishment Of A Centralized Notice Registry, And Enforcement Of Security Interests In Personal Property, And For Other Purposes – it is otherwise known as the Personal Property Security Act.
But before I delve into the bill, Mr. President, I would like to share some trivia about basketball superstar, LeBron James, in the wake of today’s loss.
Alam niyo ba, Mr. President, na noong high school pa lang si LeBron, nais siyang regaluhan ng ina ng mamahaling sasakyan na Hummer para sa kanyang ika-18 taong kaarawan.
Ang problema? Ang Hummer ay nagkakahalaga ng $50,000 at walang pambili si Mommy Gloria.
Dahil walang pambili, lumapit si Gloria James sa isang bangko sa Ohio at nangutang.
Mr. President, esteemed colleagues, ang ginamit niyang collateral ay ang future earnings ng kaniyang anak kung siya’y maging NBA player!
Kapag napasok na raw si LeBron sa NBA, milyun-milyon ang kikitain niya.
Ang kagulat-gulat dito, tinanggap ng bangko ang collateral!
Ang tinignan nila ay ang talento ni LeBron at ang posibilidad na ito’y magiging NBA player.
Ang ending ay win-win-win! Gloria James got her loan. LeBron got a Hummer. And the bank was paid back with interest.
Mr. President, this would not have happened in the Philippines.
Currently, it is land and real property that banks consider to be the most favored form of collateral – and this is not just because of its value.
Financial institutions see land and real estate as low-risk because it is easy to ascertain that the piece of land has not been used as collateral for any other loan.
But with lenders fixated on real property, they miss out on the opportunity to provide loans to a broader groups of MSMEs and farmers.
Consequently, many of our countrymen have a very difficult time accessing loans from banks and result to borrowing from friends and family or, worse, resorting to informal loans like the 5/6 system with exorbitant interest rates.
This is particularly heartbreaking for micro, small and medium enterprises, Mr. President.
Friends and colleagues, sa aking pag-iikot, ang laging tanong sa akin ng mga nagnenegosyo ay, “Sen. Bam, saan po ako makaka-utang na mababa lang ang interes?”
Sayang, Mr. President!
Many of our small businesses have so much potential – potential for success and potential to lift families out of poverty.
Mr. President, we need to address our MSME’s lack of access to loans.
The Personal Property Security Act is one of our remedies.
This measure will encourage financial institutions to lend to more Filipinos by, one, expanding what banks consider as acceptable collateral and, two, reducing the risks associated to movable collaterals.
First, this measure will broaden the utilization of movable assets like bank accounts, accounts receivable, inventory, equipment, vehicles, agricultural products, and even intellectual property rights.
Imagine a farmer using his livestock or a craftsman using a contract for a bulk order as collateral for a loan.
But, Mr. President, we already recognize a diverse set of movable assets acceptable as collateral for loan purposes, like motor vehicles, equipment, and standing crops, such as rice or sugarcane.
The major challenge of this measure, and those tasked to implement it would be to reduce the risk of accepting movable collaterals through an efficient, comprehensive, and centralized registry.
The Personal Property Security Act pursues the design, establishment, and operation of a unified, centralized, online notice-based national collateral registry to assure banks that the collateral being submitted has not been utilized for another loan.
Mr. President, this is not new. In other countries, a simple but effective registry have boosted financing for their local entrepreneurs.
In Mexico, the creation of a national Accounts Receivable Finance Platform by the government’s development bank supported at least 130,000 SMEs through accounts receivable financing.
In China, loans with movable assets as collateral now amount to 3 trillion US dollars per year.
Mr. President, access to a centralized repository of information for movable assets will encourage financial institutions to lend to our MSMEs and may even speed up the loan application process.
With the Personal Property Security, our financial institutions increase their income by issuing more loans, Filipinos will have better access to lower-interest loans, and more Filipino families can grow their business and livelihood for a brighter future.
Mr. President, the Personal Property Security Act seeks to replicate this win-win-win scenario for the James family in Ohio – not to help parents purchase luxury vehicles for their children – but to help parents provide a better life, better future for their children through sustained livelihood.
With access to financing, a sari-sari store can grow into a convenience store and Pera Padala center.
With access to financing, a farmer or agri-preneur can purchase equipment to boost production and develop his produce.
With access to financing, a small bakery can endeavor to supply to a string of coffee shops and supermarkets.
Mr. President, aking mga kagalang-galang na kapwa senador, ipasa po natin ang Secured Transactions Act at suportahan po natin ang mga maliliit na negosyanteng Pilipino na magtagumpay at umasenso ang buhay!
Maraming salamat po!